An Indiana high-tech firm has developed an on-line service that automates small-business lending decisions for community banks.

Carmel, Ind.-based Baker Hill Corp. will not begin marketing Bank2Business.com until April, but a loan officer at a small Virginia bank involved in premarket testing credited the package with helping to snare a hotly contested $150,000 line of credit.

Bank2Business.com is an Internet-based tool that allows community banks to streamline evaluation for small business loans by as much as 75%, said Mark Hill, Baker Hill's president.

"Now, all of the sudden, those underwriters can spend a lot more time working on the relationship side of their business," Mr. Hill said.

Carl Dodson, senior credit officer at Cardinal Financial Corp. in Fairfax, Va., is ready to vouch for the product.

Cardinal is one of five banks testing the software in advance of its commercial debut. A team of loan officers at the $54.2 million-asset bank used Bank2Business to draft a proposal for a $150,000 line of credit the same day they received the application. Their prompt turnaround persuaded the borrower to select Cardinal over several larger suitors, Mr. Dodson said.

He predicted that Bank2Business would produce significant productivity gains. It would allow Cardinal to assign small-dollar loan applications to less-experienced underwriters, freeing senior loan officers to focus on larger deals, he said.

That is not the way things work now.

"Unfortunately, most banks end up looking at an application for a $100,000 line of credit exactly the same way they look at applications for $1 million," Mr. Dodson said. "With Bank2Business.com, we think it will eventually be as easy for a small business to get a $50,000 line of credit as it is for a consumer to get a $20,000 car loan."

Baker Hill teamed up with Fair, Isaac & Co. of San Francisco, to build Bank2Business. The software is based on a Fair, Isaac credit scoring product that Baker Hill customizes to reflect a client bank's underwriting parameters. Banks will pay a one-time fee of $5,000 and roughly $80 for each loan they process using the system.

Additional software to generate closing documents is being developed, but is not expected until this summer. The document component will cost extra.

Using credit scoring and underwriting information, the program generates a recommendation, and delivers a price if the loan is approved. As part of that process, the program conducts a fraud check and requests credit bureau reports.

"It is easy to operate," said Lloyd Reichenbach, senior vice president of National Penn Bank in Boyertown, Pa., another test bank for Bank2Business.

"You have the flexibility of signing on anywhere you want," Mr. Reichenbach said. "I can see a point where our loan officers in the field can literally sit in their cars with a laptop computer and a cellular phone and do an application there."

Big banks have used similar software packages for several years to capture small-business loans from the community banks that have historically dominated that segment of the market, Mr. Hill said. Bank2Business offers an affordable opportunity to level the playing field, he said.

"Community banks cannot afford to develop this kind of product on their own," Mr. Hill said. "Banks need to be at $10 billion [of assets] or above before they can start to look at that kind of technology alone."

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